Theories of Surplus Value, Part I, Chapter 3 - Part 2

If A and B are both peasant direct producers, when they exchange commodities, they exchange equal amounts of labour, or the product of equal amounts of labour. But, where A is a capitalist, and B is a worker, although they again exchange the product of equal amounts of labour, i.e. equal values, in this very process, the commodity that A buys – labour-power – gives them a command over a greater quantity of labour.

The worker receives ten hours of value, equal to the value of their labour-power, but then works not for ten hours, but for twelve hours. They create twelve hours of new value, and out of this twelve hours of new value they create, ten hours are returned to them, so as to reproduce their labour-power, whilst the capitalist pockets the other two hours of surplus value.

By conflating labour and labour-power, Smith places himself in a conundrum so that, at times, he has a labour theory of value, whereby the value of commodities is determined by the labour-time required for their production, and at others, he has a cost of production theory of value, whereby the value of commodities is determined by the labour they can command, which then resolves into wages, i.e. the value of the labour-power.

“Adam Smith, like all economists worth speaking of, takes over from the Physiocrats the conception of the average wage, which he calls the natural price of wages.” (p 69)

Marx quotes Smith to that effect.

““A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.” ([Adam Smith, Wealth of Nations, Oxford University Press, London, 1928. Vol. I, p. 75, Garnier] t. 1, l. I, ch. VIII, p. 136.*)” (p 69)

Smith also recognised the point made earlier, that, following the dissolution of the primitive commune, all increases in social productivity that increase the size of the social surplus, benefit not the producers, but the exploiters, who appropriate that surplus. Smith writes,

““The produce of labour constitutes the natural recompense or wages of labour. In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him. Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper.” ‹At any rate all those things requiring a smaller quantity of labour for their reproduction, but they “would” not only have become cheaper; they have, in point of fact, become cheaper.› “They would have been produced by a smaller quantity of labour; and as the commodities produced by equal quantities of labour would naturally in this state of things be exchanged for one another, they would have been purchased likewise with the produce of a smaller quantity […] But this original state of things, in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first introduction of the appropriation of land and the accumulation of stock. It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labour, and it would be to no purpose to trace further what might have been its effects upon the recompense or wages of labour” (Vol. I, pp. 107–09).” (p 69-70) 

Marx also notes that Smith is correct in his analysis that it is only when labour-power becomes wage labour that the really great development of its productive power occurs, “... under conditions in which the labourer himself can no longer appropriate its result.” (p 70)

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